UPDATE 1-Corrections Corp Q3 lags Street; 2008 outlook cut

* Cuts 2008 earnings outlook

* Q3 results trail Street

* California inmate transfer delay hurts

* Shares down 15 pct

Nov 6 (Reuters) - Prison manager Corrections Corp of America (CXW.N) reported quarterly results that trailed market estimates as it took expenses for an expected rise in the number of inmates at two of its prisons, and cut its 2008 earnings outlook for the second time in three months.

Third-quarter results reflect the impact of staffing expenses the company took in anticipation of additional inmate populations from California at its Tallahatchie County Correctional Facility in Mississippi and its newly constructed La Palma Correctional Center in Arizona.

California is the company's fourth-largest state customer.

Near the end of the second quarter, the California Department of Corrections and Rehabilitation (CDCR) had suspended the intake of inmates at the Tallahatchie facility due to medical compliance issues.

But in September, the company finalized terms of an agreement with the CDCR, after which it resumed the ramp-up of California inmate populations at the Tallahatchie facility.

On Thursday, the largest U.S. prison company cited the longer-than-expected delay in the transfer of California inmates to the Tallahatchie facility, and recent and expected cuts in inmate populations from Washington and Minnesota, among other reasons, for the outlook cut.

Corrections Corp had trimmed its full-year outlook earlier in August, citing similar reasons.

The company now expects 2008 earnings of $1.18 per share to $1.20 per share, down from its earlier outlook of $1.21 to $1.24 a share.

Shares of the Nashville, Tennessee-based company fell to a low of $16.00, before recovering some losses to trade down $2.68 at $16.17 late Thursday morning on the New York Stock Exchange.

For the alerts, please double-click [ID:nWNAB8947] . (Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Pratish Narayanan)